Online, discounters and c-stores to drive retail growth

Online retail, discounters and convenience stores are set to drive grocery retail growth in the next five years, according to grocery think-tank IGD.

Online retail will boost value sales by more than 50% to £16bn, while discounters’ sales will rise by half their current level to reach £30.1bn, predicted IGD.

“In the last month, 40% of all British shoppers say they have bought some of their food and groceries online, but looking ahead to the next two to three years, that figure rises to 60% of shoppers who say it’s likely they will shop online,” said IGD chief executive Joanne Denney-Finch.

“Four in five (79%) shoppers say they have visited a variety discounter for some of their grocery shopping in the last month, while two-thirds (62%) say they used a food discounter.” Seven in 10 food discount shoppers said the quality of the products they bought from these stores had improved over the past couple of years, Denney-Finch said.

However, while online retail is likely to remain the biggest engine for sales growth over the period, the organisation predicted a slowdown compared with previous years as retailers focus on hypermarket-sized stores and small outlets.

There are clearly opportunities for discount and convenience retailers, which IGD predicted would grow the second- and third-fastest respectively of all the grocery channels.

“With nine out of 10 shoppers claiming to have visited a convenience store in the last month, it’s not hard to see why we believe this will remain the third-fastest growing grocery channel,” said Denney-Finch.

“Small stores have an enduring appeal and there are some clear opportunities for them to engage the younger generation, with one in five (19%) 18- to 25-year-olds mainly shopping in convenience stores, which is more than double the number of those aged 26 and over (7%). There’s also a huge opportunity for food-to-go, with more than eight in 10 (83%) c-store shoppers saying they could be encouraged to buy more food-to-go at their main convenience store.”

By 2022, IGD forecast that £1 in every £7 would be spent in discounters, versus £1 in every £9 currently. C-stores will have increased sales by 18% to £47bn, it claimed.

The organisation predicted total grocery retail sales will grow by 15% up to 2022, from £185bn to £213bn.